Earlier this week, government officials, businesses and civil society leaders from nearly 200 countries gathered for the 2019 United Nations Climate Summit. But compared to past climate conferences, which may have featured inspirational speakers and commitment to action, Monday’s Summit closing saw a marked change in tone.
While many of the countries in attendance were expected to announce they would ramp up commitments and actions originally set by the Paris agreement, most of the major players fell short (United States aside). Put simply by Greta Thunberg – who, in an impassioned opening statement announced she would pursue lawsuits against five countries for jeopardising climate – the Summit delegates in attendance were “still not mature enough to tell it like it is.”
The biggest takeaway from the event? I had two.
First, Governments clearly aren’t meeting expectations of today’s youth when it comes to taking meaningful action on climate change. Second, there is an opportunity and imperative to drive change elsewhere.
Consumer expectations of corporate action has spiked
Unsurprisingly, distrust in Government and a growing focus on climate action has driven an increase in consumer expectations of companies to take the lead on environmental issues. FleishmanHillard’s recently published Authenticity Gap report found that in the period of just one year, protecting environment jumped from being 17th to 3rd in terms of where consumers most want businesses to take a stand.
A key conclusion of the report – which studied 20 industries, 160 companies, and 1,140 engaged UK consumers on where companies fared against expectations – was that 84% of the climate efforts disclosed by businesses were not perceived by consumers as strong enough.
Nearly four in five (79%) of consumers said climate change and environment issues were important to them, and 47% said they wanted to hear more about how companies are creating solutions to reduce its climate impact.
Companies need to act, without jumping on the climate bandwagon
But there is a big caveat to consumers wanting to hear from companies on the topic: it must be authentic. Seventeen out of 20 of the industries studied had an authenticity gap when it came to care of the environment. That means there is a disconnect between what companies are doing and communicating, versus what consumers experience of them.
It means that less talk and more walk. It means a company won’t get credit for a token case study about a sustainable product amidst sister brands that are poorly sourced. Putting out a press release about cutting carbon emissions by 2020 won’t cut it – that is seen as table stakes.
Audiences are demanding more commitment from companies as they see first-hand the effect of environmental decline, and they expect genuine action.
So, what should companies be doing?
- First, get your house in order before jumping on the climate bandwagon. If you’re launching an eco-friendly clothing line, you should have full-sight of your supply chain, ensuring workers’ rights and the environment are looked after. And when you are ready to announce an environmental commitment, don’t expect reputational benefit until real change is achieved.
- Improve disclosure and transparency around environmental and climate issues – because your consumers are looking for it. Similarly, it is important to share data-driven proof of ESG commitments creating impact.
- Get the executive leaders on board. If you’re serious about creating change, the CEO must be the driving force. They don’t need to be the face of the campaign, but they do need to be able to justify it to your investors.
- Stick to your core purpose, don’t feel pressured to be controversial. Consumers don’t expect companies to fix everything but will scrutinise them to make a positive difference on the issues they can influence. Three out of four engaged consumers in the UK expect CEOs to take a stand on issues that have an impact on their company’s customers (76%), products (72%), and employees (76%). Less importance was placed on having a stand on controversial issues that influenced government policy changes (48%).
The good news is, all the bad news is driving some positive action. Over the weekend the UN announced a large group of multinational companies including Danone, Ikea, Salesforce and L’Oréal joined the UN Global Compact, pledging to drastically cut greenhouse gas emissions in order to meet the goals of the Paris Agreement.
And last month the US Business Roundtable, a traditionally capitalist non-profit association representing more than 200 CEOs of American companies, updated its statement of Purpose of a Corporation to create value for all stakeholders and the environment, instead of shareholders alone.
Ultimately, smart business leaders are realising that environmental responsibility and profit now go hand-in-hand. Speaking at the UN Global Compact Private Sector Forum, Anand Mahindra, chairman of multinational conglomerate Mahindra Group, said climate action represents the biggest business opportunity of the next few decades. It’s also easy to see how growing expectations for action on climate issues has been reflected in the financial services industry given the rise of ESG and impact investing.
We have a way to go, but the companies that step up on climate change and environment issues – authentically – will not only affect real change but reap the reputational and financial benefits.
Carly Hilkin, Corporate Communications
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January 15, 2020
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